Revision before Test 2

Question 1

Sconelicious Enterprise is a business that produces homemade scones and sells its fresh
scone at its café. Previously, the owner had three employees, and they were paid based on
hours worked. Unfortunately, the Covid-19 pandemic has forced the cafe to close, and the
business survives by selling the scone online and delivering for the nearby customers. This
situation has made the owner hires one part-time employee to handle the order. The
business remunerates its part-time employee based on the differential rate of orders. The
following information was available for the third week of December 2021:

Employees Yusra Amna Nelly Ali

Status Skilled Skilled Semi-skilled Part-time
Rate RM10/hour RM10/hour RM8/hour Orders Rate per order

RM1.50
1-50 RM2.00
51-100 RM2.50
101-150 RM3.00
151 and above
Actual hour 48 45 38.5 20
worked
Unit 324 pieces 282 pieces 144 pieces 125 orders
produced

The normal working hours is 40 hours in a week. The business pays an overtime premium of
50% for the first five hours and 100% for the excess hours. Ali is guaranteed a minimum
wage of RM250 but is not entitled to overtime and bonus pay.

The business implements an individual bonus scheme. The time allowed to produce one piece of
scone is six pieces per hour for the skilled employees and four pieces per hour for a semi-skilled
employee. The bonus is calculated based on time saved at 30% of the normal hourly rate.
Required:
a. Find the basic and overtime pay for each of the employees.
b. Compute the bonus paid to each employee by stating clearly the time allowed, time taken and
time saved.
c. State 4 examples of the non-monetary incentive scheme provided to the employee

Question 2
Glamping Sdn Bd is a company that is involved in the production of various types of camping tents.
The company has three production departments: Designing, Cutting and Sewing; and two service
departments: Quality Assurance and Stores. Cutting and Sewing departments used highly
sophisticated machinery, while the Designing department is labour-oriented. The following
information is available for the month of January 2022:

Costs Total Designing Cutting Sewing Quality Stores

Assurance
(RM) (RM) (RM) (RM) (RM) (RM)
Direct material 75,000 - 50,000 25,000 - -
Indirect material 24,000 8,000 6,000 7,000 1,500 1,500
Direct labour 67,000 14,000 32,000 21,000 - -
Indirect labour 32,000 7,800 8,400 9,600 4,200 2,000
Other allocated cost 16,000 5,300 4,300 3,200 2,400 800
Depreciation of 34,000
machines
Supervisor’s salary 28,000
Factory fire 25,000
insurance
Factory utilities 46,000
Power 52,000

Total Designing Cutting Sewing Quality Stores

Assurance

Floor area (m2) 12,000 2,400 2,400 3,600 1,800 1,800

Number of 350 70 105 105 35 35
employees
Book value of 240,000 72,000 48,000 120,000
machine (RM)
Machine hours 18,000 4,000 6,000 8,000
Kilowatt hours 9,000 1,800 3,600 3,600
Book value of 480,000 72,000 96,000 144,000 48,000 120,000
factory (RM)
Direct labour hours 13,000 6,600 3,200 3,200

The reapportionment of the two service departments are as follows:

Designing Cutting Sewing Quality Stores Total

Assurance

Quality assurance 20% 40% 40% - - 100%

Stores 10% 30% 60% - - 100%

Required:
a. Prepare an overhead analysis sheet showing allocation, apportionment a reapportionment of
overhead. (Note: Round up the answers to the nearest RM)
b. Compute the predetermined overhead absorption rates (OAR) for each department. (Note:
Round up the answers to two decimal places)
c. Briefly explain 4 reasons for over or under absorption of overhead.
Question 3
ProSublimation Printing Sdn Bd is a company that specializes in custom jersey printing. Currently,
the company is adopting the traditional method in determining the overhead cost of its product by
using direct labour hours as a basis.
Below is the available information related to the production of one the jerseys, the interlock jersey:

Direct material cost per unit RM25

Direct labour cost per unit RM15
Direct labour hours per unit 2.5 hours
Overhead Absorption Rate (OAR) RM8 per direct labour hour
Number of units produced 50.000 units
Machine hours per unit 1.5 hours
Number of purchase order 300 orders
Number of set ups 180 set ups

A newly appointed accountant has proposed to the management Activity-Based Costing (ABC) to
ensure accuracy of overhead costs charged to the products. The following is overhead costs that have
been traced based on its four main activities:

Activity Cost Pool Expected Overhead Cost Total driver

(RM)
Purchasing 300.000 3,000 orders
Machine set ups 90,000 1,800 set ups
Machining 450,000 100.000 machine hours
Packaging 75,000 150,000 units
Total 915,000

Required:
a. Calculate the cost driver rate for each activity using the ABC system.
b. Calculate the production cost per unit of interlock jersey under the traditional costing system
and the ABC system.
c. Based on the production cost calculated above, advise whether the company should change to
the ABC method or maintains the current costing system.
d. Discuss 3 characteristics of the ABC System

Question 4
a. Give TWO (2) examples of businesses that practised job costing and batch costing.

b. Gift4u Enterprise received a special request from Teacher Zetty to give 18 chocolate bouquets
to her pupils as a reward for being active in home-based teaching and learning (PdPR)
classes. The detail of the job is as follows:

Material purchased RM252

Direct labour 18 hours at RM6 per hour
 Production overhead Overhead absorption rate (OAR) is RM3.50
per direct labour hour
Selling and distribution expense RM54
General expenses 25% of direct labour cost
Profit determination 20% margin

Required:
Find the selling price per unit of the chocolate bouquet by preparing the Job Cost Sheet.

Question 5
a. State TWO (2) differences between service and manufacturing business.

b. FastSafe Delivery Sdn Bh is a transportation business that serves customers around Pontian
during the movement control order (MCO). Mostly the rider delivers groceries and food.
Currently, the business has fifteen riders and two administrative staff. Each rider is entitled to
a company's motorcycle. During this economic downturn, they will receive a fixed salary
regardless of the number of delivery.

Given below are the expenses incurred for the year ended 2021:

Rider's salary RM1,200 per month per rider

Admin staff's salary RM900 per month per staff
Fuel cost RM4,500 per month
Business license RM1,800 per annum
Repair and maintenance cost RM2,400 per quarter
Insurance cost RM3,750 per annum
Depreciation of motorcycle RM1,350 per annum per motorcycle
Wi-fi and internet subscriptions RM180 per month

Required:
Evaluate the total operating costs of FastSafe Delivery Sdn Bd for the year ended 2021.